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DO LEAN PRODUCTION PRINCIPLES CREATE “GOOD JOBS” IN RETAIL?

Most of us have heard stories about Lean production methods improving assembly line flow in automotive manufacturing and more recently, in delivery of health care services. Lean concepts, like “just-in-time” supply and “single-piece flow” have become mantras for smooth, waste-free production, and high worker productivity.  But Lean production is not usually the first thing that comes to mind when trying to create a high-involvement employee culture, and certainly not for retail, which has a well-deserved reputation for mind-numbing, low-pay jobs.

A colleague recently alerted me to the work of MIT Sloan School of Management Professor Zeynep Ton, who has studied job quality in the retail industry.  In her TEDx talk and book, Professor Ton explores the benefits of the unorthodox (for retail) business strategy of “investing in people,” a strategy that creates meaningful jobs for employees, highly productive business operations, and loyal customers.  She points to a group of retailers creating “good jobs” by practicing this “invest-in-people” strategy, a group containing some familiar brand names: Costco, Trader Joe’s, and QuikTrip.

The professor’s research reveals four features of a “invest-in-people strategy” as practiced by these successful companies.  But what isn’t mentioned in her presentation, is that these same four features are also embodied in Lean production principles.  These winning features (and related Lean principles) include the following:

1) Standardize and Empower – Professor Ton’s “good job” retailers standardize repetitive employee tasks, but employees are free to improve the standard when they find a better way.  This gives employees a sense of ownership and control.

“Standard work” is also considered to be a foundation of Lean continuous improvement.  As Lean guru Masaaki Imai says in his book in Gemba Kaizen “Where there is no standard, there can be no improvement.”  In Lean, employees in the “actual work place” (or gemba in Japanese) are expected to maintain and improve work standards.

2) Cross train employees – Employees at the “good job” retailers are trained to perform more than one job. This provides a change of pace makes the work more interesting, but more importantly enables one worker to cover for another who is helping a customer.  The customer wins, the employee wins, and ultimately the retailer wins.  Likewise, in Lean production, employees are cross trained for flexibility, so that the team members can aid each other in covering surges or backups in production.  The result: better productivity and smoother flow of production.

3) Operate with slack – “Good job” retailers don’t schedule their employees too tightly.  They leave slack in the schedule for cross training, improving standards, and most importantly, as insurance to cope with unplanned interruptions. These interruptions usually come from customers.  For example, Trader Joe’s expects customers to ask employees about a wine to go with Aunt Sophie’s duck à l’orange.  By the same token, Costco expects customers to stop employees on the retail floor for directions to items featured in their monthly coupon book.

By the same token, Lean production strives to avoid muri, a Japanese term meaning “overburden.”  Scheduling just enough employee time to cover planned production is considered risky, because this leaves no time for on-the-job training, responding to interruptions, or quality improvement work.  Anything unexpected would then cause overburdening of workers as they scramble to catch up with the production plan. Thus, a Lean operation seeks to reduce variation, but also to plan sufficient resources to handle normal variations in the work.

4) Offer fewer products – Professor Ton’s “good job” retailers offer a smaller line of products than their competitors, reducing the complexity of store operations, and making it easier for employees – including stockers and cashiers – to be more knowledgeable about product offerings.  For example, if you’ve shopped at Trader Joe’s, you know their stores have a fraction of the square footage (and according to Ton, one tenth the products) of a typical supermarket.  Yet, odds are that most employees in a Trader Joe’s have used many, if not most, of the items in the store, and will offer opinions on their favorite recipes.   At Trader Joe’s, items that receive negative or only lukewarm feedback from customers or employees are quickly removed from the product lineup.

Similarly, Lean production has a practice called “variety reduction” that seeks to reduce complexity of inputs and outputs in within both the product mix and operations (see Manos and Vincent’s Lean Handbook, p. 231 for more on this concept).  Lean practitioners also use the technique called 5S to organize the workplace, remove infrequently-used items, and make it easier to quickly access more important stock items.   The result is a more user friendly and customer friendly workplace.

What Zeynep Ton’s research is showing us is the power of investing in people and giving them a meaningful and creative role in quality improvement and in serving the customer.  These concepts were first proven to confer strategic advantage in manufacturing for companies like Toyota, and later for many other companies documented by Masaaki Imai.  Most of the companies mentioned in Imai’s book were initially attracted to Lean methods by the promise of low cost, high quality, highly efficient production or service operations.  And again for most, it took years to realize the strategic benefits of an “invest in people” culture, as the culture took hold and they continued to improve and widen the lead gained on competitors.

What’s promising is that, while only few of us will have a chance to tour a Lean hospital or Lean production plant, most of us can experience a Lean retailer like Trader Joe’s or Costco.  So maybe “investing in people” will become more widely recognized as a formula for success.